Documentary Letter Of Credit


A letter of credit is a written commitment from the bank guaranteeing that a buyer’s payment to the seller will be received on time and it also assures for the promised amount. On failing to pay the amount above, it becomes the liability of the guaranteeing bank to pay the amount and also to give maximum protection to the importer as well as to the exporter. A Documentary Letter of Credit is an official letter written by the buyer of a product(s) to the bank taking care of his/ her money transactions, instructing them to pay the required amount of money to the seller once certain terms and conditions are satisfied.

This letter is useful in the case of international business transactions. It ensures that payment is made once all the conditions have been met by both the parties involved in the transaction. It eliminates much risk in the case of such transactions and ensures timely shipping of products as well as submission of required documents. Maintain a positive tone in the letter and keep it short. Have a peek at the sample of documentary letter of credit to get the idea for writing it on your own.

Sample Letter

The following is a sample letter for Documentary Letter Of Credit.



Tesla Inc. Ltd.,

North Park, Street No. 25

New York.



Diana Sanders,

Bank Manager,

The Pentagon International Bank,

North Valley, Street No. 59,

New York.

Subject: Regarding the letter of Credit.

Dear Ms.Sanders,

I am writing this letter on behalf of the Technical Department at Tesla Inc. Ltd. concerning the business transaction of my company with Pearson Inc. Ltd., Canada. Tesla Inc. Ltd. and Pearson Inc. Ltd. have agreed to a contract of import and export of iron and crude oil.

Tesla Inc. Ltd. is the oldest industry of iron ores in New York since YYYY. Being the biggest and largest industry in New York, it knows how to deal with the market. For our further dealings and to keep the contract in hand, we need a guaranteeing bank to ensure the payment from our side.

I, Charles Baron, Production Manager at Tesla Inc. Ltd., therefore, write to you for your approval for this documentary letter of credit and for your support in our further contract. Kindly generate a credit number, so that the contract doesn’t get hampered.

I wait for a positive response from your side.

Thanking you.

Yours sincerely,

Charles Baron,

Production Manager,

Tesla Inc. Ltd.,

New York.

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